2023 (11) TMI 409 - AT - Central Excise

CENVAT Credit - input services - outdoor catering service - period January, 2016 to June, 2017 - invocation of extended period of limitation - suppression of facts or not - HELD THAT - The issue is no more res integra in view of the decision of the Larger Bench of the Tribunal in the case of Wipro Ltd. 2018 (4) TMI 149 - CESTAT BANGALORE , wherein it has been held that the definition of input service has been amended w.e.f. 01.04.2011 providing the exclusion clause, wherein the definition of input service under Rule 2(l) ibid, specifically excludes outdoor catering services . It has been concluded in the said order that the outdoor catering service is not eligible for input service credit post amendment dated 01.04.2011 vide Notification No. 3/2011-CE (NT) dated 01.03.2011. The issue of availing CENVAT Credit on input service on outdoor catering service in respect of the canteen facility in the case of appellants has already been settled by this Tribunal in the assessee-appellant s own case in 2018 (1) TMI 201 - CESTAT MUMBAI , where it was held that relying on the decision of the Tribunal in case of Ultratech Cement Ltd. 2016 (12) TMI 381 - CESTAT HYDERABAD and Hindustan Coca Cola Beverages Pvt. Ltd. 2016 (8) TMI 35 - CESTAT HYDERABAD the appeal is allowed. Invocation of extended period of limitation - suppression of facts or not - HELD THAT - The department is not only well aware of the fact that the appellants were taking CENVAT credit on outdoor catering service but were also defending their case. Thus, it cannot be accepted that there exists any ground for suppression on this particular aspect. Hon ble Supreme Court, in the case of PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY 1995 (3) TMI 100 - SUPREME COURT have ruled that when the Revenue authorities were aware of the facts about the assessee s activities, then issuance of show cause notice should be confined to the normal period. The demand of CENVAT Credit of Service Tax paid on outdoor catering service for the normal period alone is sustainable. However, the demand of interest for extended period is not sustainable as Department was aware of the issue as evidenced by the order of the Tribunal dated 29.11.2017 and as the issue was agitated in the highest Court by various appellate authorities - the interest and penalty imposed/confirmed in the impugned order by upholding the Order-in- Original dated 27.06.2019 is set aside - matter is remanded back to the original authority to re-quantify the demand for the normal period with regard to impugned outdoor catering service on which CENVAT Credit was taken by the appellants. Appeal partly allowed by way of remand.

Summary

Issues Involved:
1. Admissibility of CENVAT Credit for outdoor catering services.
2. Invocation of extended period for demand of service tax.
3. Imposition of interest and penalty for irregular availment of CENVAT Credit.

Summary:

1. Admissibility of CENVAT Credit for Outdoor Catering Services:
The appellants, M/s Hawkins Cookers Limited, contested the denial of CENVAT Credit on outdoor catering services provided to employees. The Department argued that Rule 2(l) of the CENVAT Credit Rules, 2004, excludes outdoor catering services from the definition of input service. The Tribunal upheld the Department's stance, referencing the Larger Bench decision in Wipro Ltd. Vs. CCE, Bangalore-III, which confirmed that post-01.04.2011, outdoor catering services are ineligible for input service credit due to the exclusion clause.

2. Invocation of Extended Period for Demand of Service Tax:
The appellants contended that the extended period for demand and imposition of penalty was unjustified, citing prior Tribunal decisions and the Department's awareness of their CENVAT Credit practices. The Tribunal agreed, noting that the issue was previously adjudicated in the appellants' favor and the Department was aware of the credit being taken. The Tribunal referenced the Supreme Court rulings in Pushpam Pharmaceuticals and Anand Nishikawa Co. Ltd., emphasizing that suppression of facts requires deliberate omission, which was not evident in this case.

3. Imposition of Interest and Penalty:
The Tribunal found that the imposition of interest and penalty was not sustainable due to the interpretational nature of the issue and the lack of clarity during the disputed period. The Tribunal noted that the finality of the issue was only achieved with the Supreme Court decision in Toyota Kirloskar Motor Pvt. Ltd. on 18.11.2021, which clarified the exclusion of outdoor catering services from the definition of input service. Consequently, the Tribunal set aside the interest and penalty but upheld the demand for the normal period.

Conclusion:
The Tribunal remanded the case back to the original authority for re-quantification of the CENVAT Credit demand for the normal period, excluding the extended period. The appeal was partly allowed, with the interest and penalty being set aside.